commercial risks sudan

7/30/2019 Commercial Risks Sudan

1/10

COMMERCIAL RISKS SUDAN


2/10

REPUBLIC OF SUDAN

Capital: Khartoum

Independence : 1956

Currency: Sudanese pound

Population: 34,206,710 (includes population of South Sudan)

President: Omar al-Bashir

Language: Arabic, English


3/10

HISTORY

Independence : 1956

First Sudanese Civil War: 1955-1972

Second Civil War : 1983

Darfur conflict

Separation of North Sudan and SouthSudan: 2011

Deteriorating relationship between South andNorth Sudan

Widespread humanitarian crisis persists

The nation is deformed by the sins of war


4/10

ADVERSE IMPACT OF SECESSION ON ECONOMY

Current Account: After a substantial surplus of US$ 2.7 billion during Jan-June 2011 prior to the secession, the current account balance drasticallyturned into a large deficit of US$ 1.5billion during July-September 2011, and fdue to the loss of oil export

Foreign Exchange: Loss of main source of foreign exchange through oilexports have left Sudanese pound depreciating by 50%

Inflation: Inflation has increased to a staggering 28.6% mark

Exports: Exports have drastically comedown by 74%, particularly petroleum

exports have dramatically dropped to US$678 million from US$6.6 billion


5/10

The discovery and exploitation ofoil in Sudan has generally beenassociated with a shrinking of thenon-oil tradable goods sector

All of Sudans fast growing

sectors were either related to oilor non-tradable services, whilethe growth of agriculture andmanufacturing has been slowerthan the growth rate of theoverall economy

Sudan missed the opportunity tobuild the foundation for adiversified and sustainableeconomy

Major sectors contributing to growth

1.2

2.9

4.2

4.9

7.3

10.2

10.3

10.5

11.3

11.5

0 3 6 9 12 15 18

Livestock

Irrigated cro ps

M anufacturing

Rainfed crops

Transport &

communications

Trade,

restaurants and

Electricity & water

Other services

Construction

Other mining

Oil

M ining &

non-tradable

sectors

Tradablesectors

Ave rage growth rate (2000-08)

39.3


6/10

SUDAN HAS FAILED TO BUILD THE FOUNDATION FOR PRIVATESECTOR LED GROWTH

Following the dominance of the oilsector, the public sector has becomethe principal contributor to the

growth process, while privatesector growth has beenconsiderably weaker.

During the last ten years, the publicsectors share in GDP has increased

from 6 percent to nearly 40percent, which has become animpediment to the development ofa robust private sector

Share of GDP (in %)

-

20

40

60

80

100

1998 2000 2002 2004 2006 2008

Private sector Public sector


7/10

ECONOMY OF YOUR COUNTRY

Explain which goodsand services areproduced in your

country. How dopeople typicallyprovide for the needsof themselves and

their families?


8/10

COMMERCIAL RISKS INVOLVED IN DOINGBUSINESS IN SUDAN

Commercial environment is highly challenging:

- Doing business 2010 rank: 154 out of 183 countries

Infrastructure :

- Quality of roads, rail, ports and airport is low

- Inadequate infrastructure is one of the major deterrent for investors

Corporate governance

- Establishing a business is a lengthy and cumbersome process

- Investor protection is inadequate


9/10

NON-TARIFF BARRIERS

Non-Tariff barriers are amajor obstacle to trade

The process and costsincurred are comparativelyhigher to OECD

Sudan Region

average

OECD

average

Documents requiredfor export (number)

6 7.8 4.3

Time required forexport (days)

32 33.6 10.5

Cost to export (USDper container)

2050 1941 1089

Documents requiredfor import (number)

6 8.8 4.9

Time required forimport (days)

46 39.4 11

Cost to import (USDper Container)

2900 2365 1145


10/10

LEGAL AND REGULATORY ENVIRONMENT

Sudans judicial environment is

complex and unreliable

Contract enforcement is a lengthyand costly procedure

Sudan score -1.50 in World banks,Worldwide Governance indicators,reflecting the unreliability of the

judicial system, its proneness topolitical interference andmanupulation